-In the above figure, the economy is at point a on the initial demand for loanable funds curve DLF?. What happens if the real interest rate rises?
A) There is a movement to a point such as b on the demand for loanable funds curve DLF?.
B) The demand for loanable funds curve shifts rightward to a curve such as DLF?.
C) The demand for loanable funds curve shifts leftward to a curve such as DLF?.
D) none of the above

Question

-In the above figure, the economy is at point a on the initial demand for loanable funds curve DLF?. What happens if the real interest rate rises?
A) There is a movement to a point such as b on the demand for loanable funds curve DLF?. 
B) The demand for loanable funds curve shifts rightward to a curve such as DLF?. 
C) The demand for loanable funds curve shifts leftward to a curve such as DLF?. 
D) none of the above

Quizplus · Accepted Answer

A rise in the real interest rate would not shift the demand curve for loanable funds but would result in a movement along the demand curve to a lower quantity of loanable funds demanded, such as point b.

-In the Above Figure, the Economy Is at Point a on the Initial